As a result of the decline of confidence and the demand for liquidity, the American banking system began to collapse.
The Reconstruction Finance Corporation was set up early in 1932 with $3 ½ billion in government money to advance to banks and other large corporations.
By the end of the year, it had lent over $1 ½ billion. When the details of
these loans were published (in January 1933), runs on the banks were intensified.
A bank holiday was declared in Nevada in October 1932, in Iowa in January 1933, in six states during February, and in sixteen states in the first three days of March.
From February 1st to March 4th the Federal Reserve Bank in New York lost $756 million in gold; it called in $709 million from the other Federal Reserve Banks, which were also subject to runs.
The banks of the whole United States were closed by executive order on March 4 to be reopened after March 12th if their condition was satisfactory.
Export of gold was subjected to license, convertibility of notes into gold was ended, and private holding of gold was made illegal.
These orders, completed on April 20, 1933, took the United States off the gold standard.
The Central Exchange Triangle Was Disrupted
The Countries of the World Divide into Three Groups:a sterling bloc, a gold bloc, and a dollar bloc.
The Whole Banking System in America Is Insolvent
Nations Begin to Pursue Policies of Economic Nationalism
World Trade System Breaks into Segregated Markets
The Banker-Engendered Deflationary Crisis Became a Chief Cause of World War II
Taken from Tragedy and Hope Carrol Quigley